A leader in today’s Telegraph notes the impact of Gordon Brown’s fat government on the UK economy:
"The transfer of wealth from the productive to the unproductive sector, accomplished with remorseless determination by Gordon Brown, is the prime reason why (as the OECD reported yesterday) Britain’s economy now has a lower growth rate than the EU average."
One economy with above-average growth is Ireland. The Shadow Chancellor George Osborne is in Dublin today to study the reasons behind the last decade’s spectacular growth in that country. ConservativeHome will link to his speech as soon as we have it but he uses an article in today’s Times to identify three main lessons from Ireland:
(1) Ireland’s "world-class" education system: "On various different rankings it is placed either third or fourth in the world. By contrast, Britain is ranked 33rd and our poor education performance is repeatedly identified by organisations such as the OECD as our greatest weakness… It is telling that even limited education reform is proving such a struggle for the Prime Minister."
(2) "World class" research and development: "Using the best R&D, businesses can grow and make the most of the huge opportunities that exist in the world. That is why it is shocking that the level of R&D spending actually fell in Britain last year. Ireland’s intellectual property laws give incentives for companies to innovate, and the tax system gives huge incentives to turn R&D into the finished article. No tax is paid on revenue from intellectual property where the underlying R&D work was carried out in Ireland. While the Treasury here fiddles with its complex R&D tax credit system, I want to examine whether we could not adopt elements of Ireland’s simple and effective approach."
(3) Competitive tax levels: "In a world where cheap, rapid communication means that investment decisions are made on a global basis, capital will go wherever investment is most attractive. Ireland’s business tax rates are only 12.5 per cent, while Britain’s are becoming among the highest in the developed world."
George Osborne’s focus on corporate tax rates echoes the insight of Nick Longworth from Tuesday’s Platform column. Nick predicted "that the first budget of a Cameron administration will bring cuts in corporate tax rates, and simplification of tax rules, and no reductions in income tax". Mr Osborne’s article is encouraging as it notes that Ireland’s record exposes the left’s "false choice… between lower taxes and public services":
"In Ireland they have doubled spending on public services in the past decade while reducing taxes and shrinking the State’s share of national income. So not only does Ireland now have lower business and income taxes than the UK, there are also twice as many hospital beds per head of population."
George Osborne is making the right arguments about Gordon Brown’s tax burden and its effect on Britain’s economy but will he make bold and fast enough conclusions to start making the necessary case for tax relief to the British people?